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CBS2 Investigates: Water Company Asks For 24 Percent Rate Hike While Refusing To Divulge Spending Reports

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CLAREMONT (CBSLA.com) — A local water company is asking ratepayers for a 24 percent increase in rates next year.

CBS2 investigative reporter David Goldstein asked Golden State Water to show how they’re spending customers’ money.

“Why won’t you turn over the records we requested? That’s what the ratepayers want to know,” Goldstein said to Sprowls.

“We’ve got nothing to hide,” Golden State CEO Robert Sprowls said.

When we asked to look into company expenses – copies of company credit cards, travel and entertainment expenses and country club memberships — the company refused to hand them over, because private companies don’t have to turn over records.

“Do you think they should have given us those records?” Goldstein asked Claremont resident and Golden State Water customer Hal Hargrave.

“If there’s nothing to hide why wouldn’t they?” Hargrave said.

Hargrave said his water bill has increased 5-6 times over the last decade.

And Hargrave has seen the charges on his water bill add up.

“Tier one water usage: $35.46,” said Hargrave, as he read off a charge from his water bill.

“I’d say 10 years ago, when I moved into this house, my normal bill was somewhere around $80-100 a month…Now, this past month, was $598,” Hargrave said.

After Golden State asked for a 24 percent increase in rates next year, Hargrave started a grass-roots organization called Claremont Outrage.

“It makes me sick to my stomach, absolutely sick to my stomach,” Hargrave said.

Golden State is the only provider of water in Claremont, located in east Los Angeles County. It also services Culver City, Simi Valley, San Gabriel and more than a dozen cities in Southern California, making it one of the state’s largest privately-owned water companies.

“My god, if you’re a shareholder you’re as happy as a lark as long as you don’t live in Claremont,” Hargrave said.

The stock of Golden State’s parent company, American States Water, is close to its yearly high. According to the company’s investor presentation, revenues keep going up. They boast of annual dividend increases for 57 consecutive years.

And according to Bloomberg Businessweek, Sprowls took in nearly $1.6 million in compensation last fiscal year.

“People I’ve talked to — excuse the expression — are outraged,” Hargrave said.

The proposed rate increase is not only affecting residents in Claremont; city leaders said the rate hike could affect the entire economy.

“Businesses call now wondering about our water rates before moving into town. There are citizens saying they’re going to leave Claremont because of the water rates. And, I think, it’s just unfair,” Hargrave said.

“Would you like to see how they spend their money?” Goldstein said.

“Yeah, I’d like to see it,” Hargrave said.

“I spoke to ratepayers and they say it’s only fair that you show how you’re spending their money because you’re asking for rate increases. How do you respond to that?” Goldstein asked Sprowls.

“We provide all the information through the PUC. They regulate us,” Sprowls said.

The PUC – Public Utilities Commission — has to approve any rate hike. Its division of ratepayer advocates reviewed Golden State’s request and determined the company only deserved a little more than an eight percent increase; they reached a settlement of around 15 percent.

Sprowls said his company needed to improve the system.

“We’re replacing infrastructure every day and that costs money,” the CEO said.

But whatever documents they gave to the PUC, by law, aren’t available to the public.

“Why not turn them over to me to make them public, so people can see them?” Goldstein said.

“We’ll give it some thought and get back to you,” Sprowls said.

“When do you think you’ll get back to me?” Goldstein said.

“I can get back to you in the next few days,” Sprowls said.

“Is that a promise?” Goldstein said.

“That’s a promise,” he replied.

Sprowls never got back to us.

We did receive an email from a public relations person hired by Golden State. He admitted Sprowls’ compensation is approximately $1.6 million as CEO of American States Water, but only a little more than $427,000 comes from Golden State and gets charged to taxpayers.

The spokesperson also said no employees get reimbursed for health or country club memberships. He claims company executives spent just more than $97,000 last year for travel, lodging and meal expenses, but they didn’t provide any of the documentation to back it up.

“I do think that’s information that should be available to the public,” Assemblyman Roger Dickenson, of Sacramento, said.

The lawmaker authored a bill that would make those documents open to the public.

“We need to know and have a right to know what the costs and expenses are,” Dickenson said.

The bill died in committee.

Nonetheless, ratepayers said they want to see proof of how their money is being spent.

It’s something the company seems reluctant to do.

“I hope you get back to me,” Goldstein said.

“We will. That’s what we do,” Sprowls said.

The city of Claremont is looking into the possibility of buying Golden State but there is no indication the water company wants to sell.

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